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Will ESMA change its mind?

While all formal indications to date indicate that ESMA plans to carry through with its new rules governing online trading – including a 30x leverage cap on CFDs – insiders within ESMA have admitted that the pan-European regulator has seen a virtual deluge of responses to its proposals, numbering in the thousands, according to a report this morning by the Financial Times.

With today (February 5) being the final day of the public consultation period on ESMA’s proposals, first revealed by ESMA in mid December, the FT posted a story this morning citing an unnamed ESMA spokesperson that ESMA got an unprecedented number of responses so far.

Without overtly saying so it seems as if the vast majority of the feedback received by ESMA, from brokers and traders alike, was against the proposals as-is and to relax the 30x leverage cap to at least 50x, if nor higher for more experienced traders.

Several of the leading UK brokers, including industry-leader IG Group Holdings plc (LON:IGG), have been conducting their own polls of clients and client feedback, which has as well been passed on to ESMA. According to the data from IG, 80% of its clients would consider going with an unlicensed, offshore broker if the leverage cap is imposed. IG’s feedback site got more than 11,000 unique responses.

The other parts of ESMA’s proposals – including a ban on binary options trading, and requiring negative balance protection – did not not seem to be as controversial as the leverage issue.

ESMA is likely to reveal its final decision soon, based on the fairly tight timetable it has pursued so far.

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